Archive for the ‘extensions’ Category

As I expected, IRS has just announced that they are giving the victims of the current California wildfires the same extended due date as they earlier provided for hurricane victims, January 31, 2018 for their 2016 tax returns, which would otherwise have been due in by this coming Monday, October 16.

As this announcement explains, this special extension applies to individuals and businesses located in the fire area, as well as those who reside outside the fire zone, who have been helping to fight the inferno and assist in the relief efforts.

As with any disaster of this magnitude, the Tax Code allows the unreimbursed loss to be deducted on either the current year’s (2017) tax returns or on the previous year’s (2016). I explained more about how this process works in my post on Hurricane Harvey tax breaks.

Update 10/13/2017: As is their normal practice, the California FTB has announced their agreement to honor the IRS’s extended 2016 filing deadlines (until 1/31/18) for those who have been affected by the current wildfires, as well as the recent hurricanes.

All last week, as we all prepared for the oncoming wrath of Hurricane Irma, I was confident that everyone in Florida could expect the same kind of official extensions of time from IRS to file tax returns that had their first extension expiring in the next few months.

While this was mainly 2016 1040s, even more pressing are the extensions for pass-through entities, such as LLCs, Partnerships, Trusts and S-Corps, which have extended deadlines of September 15, 2017 for their 2016 tax returns. In the “old days” filing any of these tax returns late wasn’t a big deal because late penalties were only based on the amount of taxes due, and as pass-through entities, they had no taxes and thus no late penalties. However this was changed a number of years ago and nowadays IRS is very aggressive in assessing late filing penalties of hundreds of dollars per month per K-1. These frequently grow into thousands of dollars.

Since Sept 15 is fast approaching, for the past few days, I have been checking the IRS news page for an announcement similar to the one they had for Hurricane Harvey, giving all those affected by Irma more time to file their 2016 tax returns. Until just a short while ago, the only Irma affected territory mentioned as having filing relief were parts of the U.S. Virgin Islands.

IRS has just released this news release, announcing the expansion of the list of areas that have been granted official deadline extensions due to Hurricane Irma disruptions.

As of right now (2:50 pm on 9/12/17) The IRS’s list of affected Florida areas only includes 16 counties. Since the evacuation order, preparation and the actual storm included all 67 counties here in Florida, IRS will need to expand that list. According to the IRS description, it’s a function of what they are told by FEMA. While not all 67 counties were hit as hard as some others, most were affected by the storm. Even people who didn’t have any actual storm damage, but heeded the Governor’s pleas to get the hell out of Florida, are going to need a lot of time to get back to their normal lives after returning to their homes.

[Update 9/14/2017] – I noticed a few more Florida counties being added yesterday to the IRS’s list. As of just before Noon today, their list of affected counties is up to 37, including Citrus, where we are located. As more hurricane damage is discovered and reported up the chain of command (FEMA, et al), this list will continue to grow.

With all of the discussion over the past few years about what a steaming pile of crap the 2,200 page ObamaCare legislation is, I had never heard of it denying anyone the ability to file for an extension of time to file their income tax returns…until a few days ago.

As has been the case for the past few decades, we only fully complete about five to ten percent of our individual income tax returns by April 15, with most clients opting for the more relaxed pace of filing for a six month extension of time. Those clients who do insist on having their returns finished by April 15 have been given a deadline of March 1 to submit all of their forms and data. It thus surprised me to read the following note that a married couple client on the Left Coast sent in with their tax return package almost four weeks after the March 1 cut-off.

I received an email from our Covered California representative reminding us that our tax returnsmust be filed by 4/15/15.
I hope this won’t be too big a problem.Very sorry for the short notice.

While I don’t like the added pressure during Tax Season, I normally try to accommodate client rush jobs, when the reason is legitimate, such as for a loan application or a child’s college financial aid. However. this didn’t feel right; so I sent the clients an email about it.

Your stuff looks complete. The only concern I have is with the new ObamaCare Form 1095-A. As I covered in my blog a short while ago, it was announced that the Calif healthcare exchange sent out incorrect 1095s to something like 800,000 people. Have you verified that the ones you sent me are accurate? Neither one has the “Corrected” box checked.

Which brings me to the due date of your tax return. Today, as well as the past few days, when clients have told us that they are just now sending in their 2014 info and are assuming that we can get their returns done by April 15, we laugh ourselves silly.

There is something very fishy about what you were told, or you may have misunderstood them. I have not heard of anyone else anywhere in the country being ordered to file their tax returns by April 15 and not being allowed to file for extensions. You are the very first person to mention such a demand, and I read a lot of other tax discussion boards. This should have come up somewhere if it were a legitimate requirement. That just doesn’t seem fair or legal for them to require that, because there are literally hundreds of reasons people may need more time to assemble all of their tax return data. In fact, after my recent heart problems, we signed up for ObamaCare and they haven’t mentioned any need to file our 1040 by April 15; which is good because we are going on extension.

However, if you can verify that the 1095s you sent are accurate, we will try our best to get your returns done by April 15. I don’t want to have to prepare an amended return if it is later discovered that the 1095s are incorrect, because IRS often audits amended returns, and I’m sure you don’t want to have to go through another IRS audit.

I hope this isn’t too confusing for you and I’m not trying to be a troublemaker. I’m just trying to look out for your best interest and it always bugs me when people are given incorrect tax advice.

Let me know if you have any questions and have verified the accuracy of the 1095 forms.

Thanks for your help with this.

Sherry added this comment to the client:

Please forward Kerry that E mail you got from Obamacare. He thinks you must be misreading it. This is the first we’re hearing about this! It could be a scam because they were telling people to hold off on doing tax returns by April 15th themselves.

The wife replied with the following

Thanks for the info Kerry. The 1095-As that he sent are the only one we received. The numbers match the totals of the checks I wrote so I think the 1095-As are both correct.

Please go ahead and file the extension.

and she also forwarded the email she had been referring to, which included the following regarding the issue of extensions

Can I File an Extension if I Received Subsidies?

Posted: 23 Mar 2015 03:33 PM PDT

Question: If you have already been getting the credit, is the 4/15 2014 tax filing deadline firm that covered ca makes you agree to, or is an extension allowed until 10/15/15? what is the final consensus? thanksAnswer: You will meet that requirement when you file a tax return on 4/15/15 along with your application for an extension. In other words, even though you are filing for an extension, you still have to file a return on April 15th.

My response:

Thanks for sending me a copy of the Covered Calif Q&A. I now understand the source of your confusion about needing to file the actual tax return by April 15.

The response to the question about extensions makes absolutely no sense and must have been written by a bureaucrat who had been partaking of a little bit too much medical marijuana. Nobody files both an extension and a tax return on April 15. It’s one or the other.

We will send you a copy of the April 15 extension and will prepare the actual returns as soon as we can after the April 15 crunch.

Since most of our clients file extensions for their 1040s, the weeks before the six month automatic extensions expire on October 15 are always much busier for us than the weeks before April 15 because most of these returns are extremely complicated.

With many of IRS’s employees on furlough (aka paid vacation), they announced that the October 15 deadline for 2012 1040s will still be next Tuesday.

Interestingly, the IRS website is still functioning, contrary to those of many other government agencies, which have been shut down as part of the BHO Regime’s attempt to inconvenience as many people as possible, while still preserving funds for their royal lifestyle.

The biggest change is the inclusion of both a five month and a six month extension to reflect the new shorter time that will be allowed for some 2008 tax returns, including partnerships (1065) and trusts (1041).

Filing Extensions Changing for Some Business Taxpayers Later this Year – Supposedly to give a longer time between the extended due dates for some types of K-1 pass-through entities and the related 1040s, the automatic extensions for 1065s and 1041s will only be for five months for those entities with a tax year ending after 9/30/08. For calendar year returns, this moves the extended due dates up to September 15, giving a full month before the October 15 extended due dates for 1040s.

Since S corps have an original due date of March 15, the current six month automatic extension already puts those returns due by September 15; so no change is required for S corps.